A Full-Time Mom Got $1.3M In A Divorce Settlement, But $8K Rent In California Is Still Too Much. ‘It Almost Feels Illegal’

A newly single mom in Irvine, California, thought a $1.3 million divorce settlement would provide stability after what she described as a “really hellacious divorce.” Instead, she found herself staring at an $8,000 monthly rent bill that had her saying, “It almost feels illegal.”

She called into “The Ramsey Show” recently to ask what to do next.

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Karen, a full-time mom with two teenagers at home, finalized her divorce after five years of legal battles. The house was sold, and she walked away with about $1.3 million, now sitting in a high-yield savings account. She also receives $15,000 a month in spousal support, but only temporarily. That support will be reassessed in November, and because her ex-husband struggles with addiction, future payments are uncertain.

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Her personal income tells a different story. After 20 years as a stay-at-home mom, she recently returned to work and now brings home about $5,600 a month after taxes.

“I am not living high on the hog,” she said. “I’m living very basic.” 

“But you’re in Irvine,” personal finance expert Dave Ramsey replied. “You’re in one of the most expensive real estate markets in the world.”

According to Redfin, there were recently 528 luxury homes for sale in Irvine, with a median listing price of $1.67 million. Homes typically stay on the market for 62 days and receive about two offers. In the past month, 123 homes were sold. There were also 401 condos and 44 townhouses on the market.

In other words, prices remain high and demand is steady.

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Even with $1.3 million in cash, buying at the median price would likely require taking on a mortgage once you factor in closing costs, property taxes, insurance and homeowners association fees. With only $5,600 in stable monthly income, qualifying and carrying that payment would be difficult.

“I’m sorry you’ve been through hell, girl, that’s heartbreaking,” Ramsey said. “You’re very wise in that even in all your pain, you’re starting to see that this math doesn’t add up.”  

Ramsey acknowledged the emotional side of uprooting teenagers but focused on long-term stability. “They can’t live in Irvine anymore,” he said. “You don’t have the money.”

The deeper issue isn’t whether $1.3 million sounds like a lot. It’s whether ongoing expenses align with guaranteed income. An $8,000 rent payment already exceeds what she earns from work. Once alimony drops or disappears, covering that gap would mean dipping into savings month after month.

That approach could slowly shrink the nest egg that’s supposed to protect her and her kids long term.

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For someone in Karen’s position, the path forward may involve relocating to a lower-cost area and protecting principal instead of using it to subsidize rent.